Sun Narrowly Outshines the Competition

As solution providers continue to emphasize services, the bottom-line impact of advanced desktops and workstations may be decreasing. But the hardware itself plays an important role in a solution provider's overall solution and ability to be a one-stop shop for its customers.

It's a tough time. Worldwide PC shipments declined by 2 percent in the second quarter of the year, according to International Data Corp. In the United States, shipments dropped 1.3 percent last quarter, the Framingham, Mass.-based market research firm found. Workstation sales also suffered. Globally, workstation shipments fell 9.2 percent, according to a preliminary report by Gartner Dataquest.

Competition in the VARBusiness Annual Report Card (ARC) this year was almost as tight as hardware margins and sales themselves: Sun Microsystems narrowly took the lead, earning an overall total of 74, only one point higher than second-place Hewlett-Packard. Compaq Computer took the third spot with a score of 72, one point ahead of IBM. Dell Computer rounded out the top five, garnering a score of 68.

How did Sun eke out its victory? It all boils down to providing a competitive value proposition, says Gary Grimes, vice president of U.S. partner management and sales operations. While others are spending billions building their professional services capabilities, Sun has reduced the number of accounts that it considers hands off to partners from more than 550 to just over 100. "This leadership will help propel Sun," Grimes says.

And it doesn't hurt to have a top-notch product, says Joe Womack, vice president of central area sales at Sun.

"Our partners still believe that the clients are really responding to a better technology with a better business proposition for the channel," Womack says. "In advanced desktops, not having to reboot the operating environment is really important, and that's a big distinction from, say, PCs, where

people don't care how often they have to reboot."

But even the best of products still must offer an attractive financial proposition to win and keep the hearts of solution providers. And vendor executives recognize the difficulties that solution providers face when it comes to making money on high-end desktops and workstations.

"We're trying to provide an opportunity to VARs to make money on IBM products," says Frank Vitagliano, vice president of distribution channel management at IBM PCD, Atlanta. "We absolutely recognize the value the VAR channel brings to our go-to-market strategy. There's absolutely no debate. The issue, though, becomes how do you work it so it becomes a consistent win-win for both parties?"

Part 2: Profit Potential

Part 3: Portal To Productivity